Lahti faces millions in additional costs due to procurement error in street maintenance contract

The city of Lahti has made a significant error in the procurement process for cleaning street pavements, which will lead to additional costs amounting to millions of euros. A couple of years ago, the city initiated a contract for street maintenance that included pavement care and cleaning. The mistake arose when a crucial figure was missing from an Excel spreadsheet related to the bidding process, which city officials failed to notice. Specifically, Lahti did not indicate the area of green spaces in the tender documents.

As a result, the contractor YIT Road submitted an extraordinary bid of 1,000 euros per square meter, whereas the typical rate for maintaining similar green areas is about 20 cents per square meter, according to Lahti’s city engineer, Mika Lastikka. Despite the outrageous bid, it was accepted by the city.

The contractor raised concerns about the bidding error a year after the contract was signed, prompting city officials to meticulously review the tender documents, which ultimately revealed the oversight.

Initially, the city considered pursuing legal action since the contract specifications had been included in other procurement documents. If the city had recognized the maintenance cost of the 7,000 square meters of green area at seven million euros, YIT would not have won the bid. However, due to uncertainty about a legal victory, the city opted for settlement discussions with YIT Road, resulting in a reduced square meter price of 100 euros.

Consequently, Lahti will pay an additional 700,000 euros annually for green area maintenance, leading to an increase of 3.5 million euros over the five-year contract period.

This issue sparked considerable discussion among decision-makers during a recent city council seminar, highlighting concerns about trust and accountability within the city administration. City officials emphasized that taxpayers should not bear the burden of the procurement error and that further cost-cutting measures would need to be pursued.